ESTABLISHMENT OF MILITARY SEA TRANSPORT SERVICE Mr. SHEPPARD. With reference to your total requirement, Admiral Hopwood, there is no question about the refining process which it has gone through. That is automatically indicated. In taking over the new functions that have been indicated, if you take over the water transportation aspect of the other military branches, that will pertain in Alaskan waters and other places? Admiral HOPWOOD. Yes, sir. Mr. SHEPPARD. Arbitrarily that will, I assume, cause the Navy to be in a position of requiring additional housing for some shore personnel. Is that not true? Admiral HopwOOD. I think not, sir, because the Military Sea Transport exists today in different forms, to wit, the Army Transport Service and the Navy Transport Service. It is the intention to maintain the same ports of embarkation and port director offices. I have no knowledge at hand now that would indicate the necessity for increased housing. Mr. SHEPPARD. In other words, the taking over of that function, then, has certain personnel limitations. They will be joint functions among the respective services. You are not literally taking it over in its complete ramification? Admiral HOPWOOD. The Navy will operate the entire sea transport system, but each of the services will reimburse the Navy for the services rendered. Secretary MATTHEWS. It will be operated by Navy personnel, taking over the civilian personnel of the other services. They are already established. Mr. SHEPPARD. That was my point, Mr. Secretary. They are established and working and the Navy is going to be operating this aspect of our required function, but there is going to be a division of personnel involved here, apparently. It will not be a complete operation on the part of the Navy. The Navy will operate up to a point, and then, I presume, on the land aspect the other military people will remain. Admiral HOPWOOD. The land aspect is separate and apart from the sea. The Military Sea Transport takes over dockside on the shore. Mr. SHEPPARD. You handle the actual dock operations? Admiral HOPWOOD. We will handle the actual ship operations, but we will not proceed beyond the dock. Mr. SHEPPARD. In other words, when it comes to warehousing and various and sundry things that might be adjacent to the docks, that will fall into the function of the other military services and you merely function in operating the docks, loading, and so forth and so on? Admiral HorwOOD. The Army will operate the dock including warehousing and will load the ship according to planning data furnished in advance by the Navy. Mr. SHEPPARD. That will be in the jurisdiction of the Navy? Mr. SHEPPARD. Mr. Sikes? Mr. SIKES. Admiral Hopwood, you have made an excellent statement. I find that you always do. You are very helpful to this committee. APPROPRIATIONS IN 1950 Will you tell me, please, how much money Congress actually appropriated for the Navy in 1950? Admiral HopWOOD. They appropriated $3,524,000,000 in cash for new authority, plus $659,000,000 in new contract authority, making a total of new obligational authority of $4,183,000,000. In addition, they appropriated $790,000,000 of new cash to liquidate contract authority granted in prior years. EXPENDITURES IN 1950 Mr. SIKES. How much money will you actually spend in fiscal 1950? Admiral HoPWOOD. Expenditures; yes, cash. Mr. SIKES. What disposition was made of the money that was saved? Admiral HorWOOD. The costs incident to the Career Compensation Act, Wage Board, and other civilian Classification Act increases made by the Congress, plus inactivation costs for ships, aircraft, and shore facilities necessitated an increase of $217,000,000. Mr. SIKES. Over what you estimated? Admiral HOPWOOD. Over what we estimated; yes sir. These $217,000,000 had to be absorbed. Mr. SIKES. How does that amount compare with the actual appropriation? If I follow your figures, I still feel that you have not used all the money appropriated in 1950. Am I wrong? Admiral HoPWOOD. No, sir. The authority of $4,183,000,000 granted by the Congress is reduced, then, to $3,985,000,000. Mr. SIKES. Does the $3,985,000,000 include the additional cost of the pay bill and the Career Compensation Act? Admiral HoPWOOD. That had to be absorbed. EXPLANATION OF 1950 FUNDS PLACED IN RESERVE Mr. SIKES. All right. Then there is still about $200,000,000 unaccounted for. What happened to the $200,000,000 ? Admiral HoPWOOD. Of the $200,000,000, $125,000,000 was for a reduction for aircraft procurement in 1950 that we are going to use in 1951. Thirty-four million dollars is a reduction in authorization for shipbuilding for 1950, and $26,000,000 is held in administrative reserve. Mr. SIKES. Who will decide what is to be done with that? Admiral HoPWOOD. The Secretary of Defense and the Bureau of the Budget. If not obligated before June 30, 1950, it will revert to the Treasury. Mr. ENGEL. Is that $26,000,000, Admiral Hopwood, $14,000,000 for public works and $12,000,000 for research? Admiral HoPWOOD. No sir. The $26,000,000 referred to is a reduction in 1950 authority and represents the net reduction in many programs. Mr. ENGEL. My figures here, as I took them down, show $125,000,000 for aircraft procurement. Admiral HoPWOOD. That is right, sir. Mr. ENGEL. $34,000,000 for ships, $14,000,000 for public works, and $12,000,000 for research and development. Admiral HoPWOOD. The $34,000,000 for ships and $14,000,000 for Public Works are reductions in 1950. The $12,000,000 for research and development to which you refer represents a reduction between the amount appropriated in 1950 and the request for 1951. The additional $26,000,000 in 1950 represents a net reduction in many programs, $5,000,000 of which was for research and development. Mr. ENGEL. I wondered if that $26,000,000 represented the $14,000,000 and the $12,000,000. Is that the same $26,000,000? Admiral HoPWOOD. No, sir. The $26,000,000 is a cut across the board, from all appropriations. Mr. ENGEL. Is that in addition to this? Admiral HopWOOD. Yes, sir. Mr. ENGEL. $26,000,000 above the items I mentioned? Admiral HoPWOOD. That is right, sir. In other words, the total difference is $198,000,000. Mr. ENGEL. What I want to know and what I think the committee wants to know is just what you would have done with the money had it been given it to you? What did you say you were going to do with that money? In other words, just what type of planes were you going to buy with the $125,000,000? Was it all for planes? What will be the effect upon the Navy by having it deferred until 1951? Was that $5,000,000 for research and development frozen or just deferred? Admiral HopwOOD. The $5,000,000 for research and development is frozen. Mr. ENGEL. Frozen? Admiral HopWOOD. Yes, sir. It is still available and could be taken from the reserve and obligated. Mr. ENGEL. But the $125,000,000 is shifted over into the 1951 budget? Admiral HoPWOOD. That is correct, sir. Mr. ENGEL. To be available July 1, 1950? Admiral HopWOOD. That is correct, sir. Mr. ENGEL. That is not true on the research and development? Admiral HopwOOD. That is not true on that. That is right, sir. EFFECT OF REDUCING FUNDS FOR AIRCRAFT PROCUREMENT IN 1950 Mr. ENGEL. Could you take the $125,000,000 and tell us just what that was justified for? What were you going to buy with that $125,000,000 which you did not buy? Admiral Hopwood. I do not have detailed figures, but I can speak generally. Mr. ENGEL. Can you put it in the record? Admiral HoPWOOD. I can put it in the record. Mr. ENGEL. I would like to have a copy of it so that when the air group comes up here I can question them on it. Admiral HoPWOOD. Yes, sir. (The information requested is as follows:) The direct effect of the cut of $125,000,000 on the aircraft procurement program for 1950 was to delete 90 fighters, 1 heavy patrol plane (antisubmarine warfare), and 5 heavy transports from the schedule. All were required in the modernization program of aircraft in the Navy. EFFECT OF REDUCING FUNDS FOR SHIPBUILDING IN 1950 Ir. ENGEL. Give us an itemized statement for that $34,000,000, you? Imiral HOPWOOD. Yes, sir. It cuts out the conversion of four deers to destroyer escorts. You see, we asked for conversion of 11 oyers to destroyer escorts for antisubmarine work and you so priated. The reduction of $34,000,000 in this program will ate the conversion of four destroyers to destroyer escorts. ENGEL. Just for the purpose of the record, what is the difference n a destroyer and destroyer escort? What is the combat capaof each ship? iral HOPWOOD. The destroyer escort is smaller than a destroyer type, resembling a destroyer, constructed in large quantities he war as an antisubmarine vessel. NGEL. That is the destroyer escort? "al HOPWOOD. The destroyer escort as against the destroyer, larger and is more of a multi-purpose ship. VGEL. I see. The destroyer escort is purely an antisubmarine 1 HOPWOOD. Not purely so; but it is more so than a destroyer. GEL. More so than a destroyer? I HOPWOOD. That is right, sir. GEL. That $34,000,000 is still frozen; is that right? HOPWOOD. No, sir. It was eliminated. AVAILABILITY OF FUNDS PLACED IN RESERVE EL. All the funds which are put in the President's reserve e within a certain period of time, provided the President available? HOPWOOD. That is right, sir. L. If he does not make them available they never become HOPWOOD. That is correct, sir. .. The $125,000,000, by action of the Budget Director, lable on July 1, 1950, at the beginning of the next fiscal OPWOOD. Yes, sir. .. But this $34,000,000 does not, so far as this budget is OPWOOD. No, sir. We will have to come to the Congress unds to continue a conversion program to take the place troyer escorts that were eliminated. With the Russians building the greatest submarine tory of the world, I cannot see at all the idea of cutting That was, of course, what we based our action on e in giving you that money. WOOD. Yes, sir. REDUCTION IN 1950 FUNDS FOR RESEARCH AND DEVELOPMENT Mr. ENGEL. What is the explanation with regard to this $12,000,000 for research and development? Can you give us anything on that! Admiral HopwOOD. There was not a $12,000,000 reduction in that. Mr. ENGEL. What is that? Admiral HopwOOD. The 1951 budget for research and development is $12,000,000 below what you appropriated in 1950. Mr. ENGEL. The 1951 budget is $12,000,000 less than the 1950 budget for research and development? Admiral HoPWOOD. That is correct, sir. Mr. ENGEL. Where was that reduction made; by the Bureau of the Budget? Admiral HopwOOD. No, sir; it was in the allocation of funds within the Research and Development Board under the Secretary of Defense. Mr. ENGEL. The Secretary of Defense? Admiral HopwOOD. Yes, sir. That is the Board, as you know, which coordinates all the projects under way for all services in research and development. Mr. ENGEL. Did you ask for that $12,000,000 at any time? Admiral HorwOOD. Our initial request, I think, was for about $210,000,000. That item included in the total Navy budget would have been higher than the ceiling imposed on the Navy, so it had to be reduced somewhere. Mr. ENGEL. But when the ceiling was imposed upon the Navy the Navy itself took that cut in research and development? Admiral HoPWOOD. We took that cut. You mean for 1951? Admiral HorWOOD. Yes, sir. Mr. ENGEL. In other words, you were the ones who allocated the cuts that were to be made in your request to bring it down to the ceiling? Admiral HoPWOOD. We requested, I think, about $5,000,000 or $6,000,000 more than was actually given or granted when the final results came out. Mr. ENGEL. Could you give us a statement either on the record or off the record showing what that $5,000,000 would have bought in research? Admiral HopwOOD. In general, my understanding is that the difference is indicated in levels of operation, that no major projects were reduced, but the time schedule of accomplishing them was delayed. Mr. ENGEL. In other words, the total was reduced by $5,000,000? Admiral Hopwood. The level of operations was reduced. Mr. ENGEL. That deferred your entire research program? Admiral Hopwood. It will be pushed back. Mr. ENGEL. That is right. Admiral HopwOOD. That is right, sir. Mr. ENGEL. That delayed your entire research program. Admiral Hopwood. Yes, sir; it will be delayed a short time, sir. Mr. ENGEL. Could you give us any idea as to just what that effect would be on some of your major research programs like your antisubmarine measures and guided missiles and so forth? |